Vectren 2010 Annual Report Download - page 81

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79
Summarized Financial Information
Year Ended December 31,
(In millions) 2010 2009 2008
Summarized Statement of Income information:
Revenues 1,497.0$ 1,654.9$ 2,883.6$
Operating income (loss) (3.1) 35.2 63.7
Charge related to Investment in Liberty Gas Storage - (32.7) -
ProLiance's earnings (losses) (3.7) 4.5 64.7
As of December 31,
(In millions) 2010 2009
Summarized balance sheet information:
Current assets 441.4$ 477.6$
Noncurrent assets 59.1 61.7
Current liabilities 298.1 264.5
Noncurrent liabilities 0.4 0.5
Members' equity 208.9 282.4
Accumulated other comprehensive income (loss) (10.8) (11.6)
Noncontrolling interest 3.9 3.5
Vectren records its 61 percent share of ProLiance’s earnings after income taxes and an interest expense allocation.
Investment in Liberty Gas Storage
Liberty Gas Storage, LLC (Liberty), a joint venture between a subsidiary of ProLiance and a subsidiary of Sempra Energy (SE),
is a development project for salt-cavern natural gas storage facilities. ProLiance is the minority member with a 25 percent
interest, which it accounts for using the equity method. The project was expected to include 17 Bcf of capacity in its north
facility, and an additional 17 Bcf of capacity in its south facility. The Liberty pipeline system is currently connected with several
interstate pipelines, including the Cameron Interstate Pipeline operated by Sempra Pipelines & Storage, and will connect area
LNG regasification terminals to an interstate natural gas transmission system and storage facilities. ProLiance’s investment in
Liberty is $36.7 million at December 31, 2010, after reflecting the charge discussed below.
In late 2008, SE advised ProLiance that the completion of the phase of Liberty’s development at the north site had been delayed
by subsurface and well-completion problems. Based on testing performed in the second quarter of 2009, SE determined that
attempts at corrective measures had been unsuccessful in development of certain caverns. At June 30, 2009, Liberty recorded
a charge of approximately $132 million to write off the north caverns and certain related assets. As an equity investor in Liberty,
ProLiance recorded its share of the charge, totaling $33 million at June 30, 2009. The Company’s share is $11.9 million after
tax. In the Consolidated Statement of Income for the year ended December 31, 2009, the charge is an approximate $19.9
million reduction to Equity in earnings of unconsolidated affiliates and an income tax benefit reflected in Income taxes of
approximately $8.0 million. ProLiance has not experienced, and does not expect, any impact to its liquidity or access to capital
as a result of the impairment charge, nor is it expected that this situation will impact ProLiance’s ability to meet the needs of its
customers.
Liberty received a Demand for Arbitration from Williams Midstream Natural Gas Liquids, Inc. (“Williams”) on February 8, 2011
related to a Sublease Agreement (“Sublease”) between Liberty and Williams. Williams alleges that Liberty was negligent in its
attempt to convert certain salt caverns to natural gas storage and thereby damaged the caverns. Williams alleges damages of
$56.7 million. Liberty believes that the claims are without merit and believes that it has complied with all of its obligations to
Williams and has properly terminated the Sublease. Liberty intends to vigorously defend itself and believes it has counterclaims
against Williams which it will assert in the arbitration proceeding. Liberty has made no accrual for this matter as of December
31, 2010.